Over-extended: Tax pros look to October 15

October 6, 2020 9:00 AM

It’s that time of year again. Again.

By the final filing deadline last year, the IRS reported about 14.6 million extension requests from taxpayers, many in the final spring days of that filing season — with the overall number of returns received and processed remaining roughly even with numbers from 2018.

This year is likely to be different for extensions to Oct. 15 in the same way 2020 has been different in every other way — not least because the initial deadline itself was pushed back to July 15, making “extension season” only three months long, and not six.

Yet it does seem that for preparers, this second season will have a few constants. “I know that I’ll be in better shape than last year, but it’ll still be a grind,” said Rob Seltzer, a CPA at Seltzer Business Management in Los Angeles.

How bad will the grind be? Below, a number of practitioners shared their concerns.

Tick-tock

Tax day reminder in a notebook, close up

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Filing for an extension is an easy, fast, no-questions-asked process. Second season after second season, though, the final filing is never easy, fast or question-free, no matter how much time some taxpayers have. “It’s 10 o’clock and I’m waiting on two clients to respond so I can file and get out of the office!” said Chris Hardy, an Enrolled Agent and managing director at Georgia-based Paramount Tax and Accounting.

Used to it

Tax forms

Michael Nagle/Bloomberg

“It’s not looking that bad,” said Daniel Henn, a CPA in Rockledge, Florida. “I have about 10 percent of my clients still to finish but less than half of them have little to no input done or even possibly missing information. I think we’ll come down to the wire on a few, but not as many as I did with the Sept. 15 deadline.”

The type of client matters

Businessman busy with paperwork in office

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“Many of our clients are investors in pass-through entities (partnerships and S corporations) or are beneficiaries of trusts,” said James McGrory, a CPA and shareholder at Drucker & Scaccetti, in Philadelphia. “Even with the COVID-19 extension, we still have a significant amount of very complicated individual income tax returns for wealthy clients which must be completed by the extension deadline.”

Pressure’s off

Internal Revenue Code books sit during a House Ways and Means Committee markup hearing in Washington, D.C.

The Tax Code at a House Ways and Means Committee hearing on the Tax Cuts and Jobs Act.

Andrew Harrer/Bloomberg

Some recent developments made September interesting for partnerships. “For example, putting BBA partnership returns on extension as a matter of practice … has become advisable, because that allows such partnerships to revise a previously filed return up to its extended due date,” said David Shuster, a principal and international tax/director of tax controversy services in the New York offices of Top 100 Firm Friedman LLP.

Rev. Proc. 2020-23, issued in April, generally allowed such partnerships to amend 2018 and 2019 returns through Sept. 29 rather than do administrative adjustment requests. “That took some of the pressure off partnerships that hadn’t yet received K-1s,” Shuster said.

Over-extended: Tax pros look to October 15

Tick-tock

Used to it

Looking up

SALY, but pressurized

The type of client matters

Pressure’s off